Home health advocates continue to flood Washington D.C., making their case against the dramatic cuts suggested by the U.S. Centers for Medicare and Medicaid Services’ (CMS) in its new proposed payment rule released on June 17. And while we’re still months away from understanding where the final payment rule will end up, some prognosticators are predicting that no matter what, it may have a negative effect on the red-hot home health and post-acute transaction markets.

Not so, says Brian Bruenderman, Managing Partner of national health care mergers and acquisitions firm Stoneridge Partners.

“This is exactly when smart operators should be turning to their advisors to help them sharpen their acquisition strategy, not abandon it. There’s no better time to think about diversifying your payor sources to blunt the impact of cuts in any one area. And in a time when your competitors may be pulling back and playing it safe, this is an opportunity to set your business apart from the pack by adding new geographies and new service lines. Strategic acquisitions will bolster your position, no matter what the payment landscape looks like.”

In the short-term, the proposed rule has certainly caused more headaches for an industry that has seemed poised to take off – if only it could unburden itself from the effects of the pandemic and ensuing economic challenges. June was no different, according to the Stoneridge Partners Home Health Index (HHI); home health stock values dipped by just more than 7% last month, compared to a more than 8% drop in the S&P.

Home Health Index

Stocks for both of the home health giants that make up the HHI fell in June as compared to May. Amedisys, Inc. (Nasdaq: AMED) stocks dropped more than 9% last month, while stocks for LHC Group, Inc. (Nasdaq: LHCG) were down by more than 6%.

Last month, Amedisys suggested it was going all-in on its work with high-acuity care services provider Contessa Health, which it acquired in June 2021. While the acquisition always signaled Amedisys’s continued move into home-based higher-acuity care, its leaders last month expressed a closer bond, with Contessa becoming an integral part its business.

“I think it’s safe to say that Contessa [on its own] was going to have a good run on hospital joint ventures, particularly around more regional and smaller-market hospitals,” Amedisys CEO Chris Gerard said during William Blair’s 42nd Annual Growth Stock Conference in June. “And then Amedisys was going to probably have a handful of joint ventures added on a day-in-and-day-out basis, but not really as a part of our core business. But now, we have such an offering that the hospital systems are really wanting to form a deep relationship with us so that they can optimize their beds.”

In March, UnitedHealth Group (NYSE: UNH) agreed to buy LHC Group for a reported $5.4 billion. This month, both companies received a request from the Federal Trade Commission (FTC) for more information regarding the deal.

Post-Acute Care Index

After a strong performance in May, post-acute care company The Pennant Group, Inc. (Nasdaq: PNTG) gave back its gains and more in June, with its stock price dropping by 33%. Addus HomeCare Corporation (Nasdaq: ADUS) was relatively stable, dropping by less than a point in June.

Pennant will soon have a new CEO when Brent Guerisoli officially takes the helm on Aug. 1. Guerisoli indicates that he plans to execute Pennant’s strategy of buying community-driven agencies.

“A lot of what we’re doing now is creating more structure around the frameworks, around their systems, around their processes,” Guerisoli told Home Health Care News in June. “That foundation is so critical because that’s what we build from. If we can do that in the right way, we are going to create a significant opportunity for future partners that are going to join the organization, and future patients and residents.”

Elsewhere in the Post-Acute Care Index (PAI), stocks for Encompass Health Corporation (NYSE: EHC) dropped by more than 14% last month as it completed its spin-off of Enhabit Home Health & Hospice (NYSE: EHAB).

Quote of the Month

“Certainly, any reduction in revenues from home health will make it much harder to implement new programs such as palliative care, participate in innovations such as hospice [value-based insurance design demonstration], and impact the ability of the provider to recruit and retain staff for any of its programs as demands for higher compensation grow. In some circumstances, lower home health revenues may lead to the use of hospice revenues to subsidize other programs, rather than to continue to invest in hospice improvements such as technologies.” – Bill Dombi, President of the National Association for Home Care & Hospice.

Read the Full Article Here: Medicare Home Health Cuts Could Have Ripple Effect on Hospice, Palliative Care

Articles Featuring Stoneridge

Visit the Speaker Series Webinar Library on our website to watch our most recent Speaker Series discussing how to avoid common pitfalls when selling your healthcare business.

See It To Believe It!

The Stoneridge Partners Home Health Index (HH Index) is updated monthly and measures the performance of these two publicly traded home health companies, all listed on the NASDAQ:

  • LHC Group (LHCG)
  • Amedisys (AMED)

Here are the results of the stock prices for the past two years:

Company 6/30/22 1 mos change YTD change 6/30/21 6/30/20
Amedisys 105.12 -9.31% -35.06% 244.93 198.54
LHC Group 155.74 -6.55% +13.49% 200.26 174.32
HH Index* 130.43 -7.68% -12.79% 222.60 186.43
S&P 3785.38 -8.52% -20.58% 4297.5 3100.29
Addus 83.28 -0.26% -10.94% 87.24 92.56

Although we track the performance of Addus, they are not included in our HH Index because very little of their revenue comes from Medicare.

Enterprise Value (EV)

EV (in M) 2022 2021 2020
Amedisys 4210 8310 6730
LHC Group 5680 6260 5830
HH Index Total 9890 14570 12560
Addus 1580 1510 1280

Enterprise Value (EV), aka Selling Price, as Percent of Revenue

Company 2022 2021 2020
Amedisys 189% 392% 340%
LHC Group 251% 302% 279%
HH Index Average* 220% 347% 310%
Addus 178% 193% 214%

The Stoneridge Partners Post-Acute Care Index is updated monthly and measures the performance of these six publicly traded post-acute care companies, all listed on the NASDAQ:

  • LHC Group (LHCG)
  • Amedisys (AMED)
  • Addus (ADUS)
  • The Pennant Group, Inc. (PNTG)
  • Encompass Health (EHC)
  • Brookdale Senior Living Inc. (BKD)

This graph displays Post-Acute Care Index performance starting late 2019.

The above calculations are based on selling price being defined as Enterprise Value (EV), with data provided by Capital IQ. Enterprise value is defined as market cap plus debt, minority interest and preferred shares, minus total cash and cash equivalents. EBITDA is calculated using methodology which may differ from that used by a company for its reporting. (Home Health Index July 2022 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Hospice provider Complete Oklahoma acquired a license from Houston-based Avenir Hospice Care
  • CommuniCare Health Services took over operations of hospice and home health provider Stonerise

SOLD!!! By Stoneridge

  • View all of our closed transactions on our website

Exclusively Listed For Sale By Stoneridge Partners

Do you know of any acquisitions that have taken place? We are interested in your comments. Contact us at Stoneridge Partners.

Medicare-certified home health agency.  District 5.  Minimal census.  Accredited.

 Home Health /  Florida

$4M revenue run rate.  ID/DD Services.  Recent rate increase.

 ID/DD /  Kentucky

Co-occurring, dual-diagnosis, addiction and mental health treatment center, 13- year history.  PHP, IOP, OP levels of care, prime location and setting, treating SUD and multiple...

 Behavioral Health /  Arizona

$19.5M large home care franchisee.  89% Medicaid.  Well-established company operating more than 20 years.  Phenomenal year-over-year revenue growth.

 Home Care /  Illinois

$2.5M private pay home care agency.  20-year history, diverse referral sources.  Competitive bill rates.  Unique and successful recruiting and retention strategy.

 Home Care /  Virginia

$2.8M home health agency.  Medicare and Medicaid-certified.  Approximately 70% skilled: 10% Medicare, 25$ Medicaid, 65% MA and HMO.  Approximately 30% non-medical; 100% private pay.  Accredited.

 Home Health /  Colorado

$27M highly profitable, tech-enabled health care staffing company.  Provides on-demand workers for LTC facilities.  Impressive growth trends with extraordinary upside

 Other /  Midwest

Well-established and profitable franchisee.  Revenue of $4.9M.  Medicaid and private pay.

 Home Care /  Southwest

ABA in-home autism therapy for children.  $2.4M in revenue.  Strong growth and bottom line.

 Other /  California

Opportunity to acquire a Medicare-certified home health agency. JCAHO-accredited.  Zero deficiencies.  Region 9.

 Home Health /  Florida

Opportunity to acquire a Medicare-certified home health agency.  JACHO-accredited.  Zero deficiencies.  Minimal census.

 Home Health /  Pennsylvania

Opportunity to acquire a Medicare-certified home health agency.  Zero deficiencies.  Minimal census.

 Home Health /  Kansas

Rare southern hospice/home health CON opportunity.  $3.5M in revenue, 60+ hospice ADC.  Strong staff recruiting and retention.

 Home Health /  South

Medicaid/private pay, Medicare-certified.  $3 million in revenue.  CHAP-accredited.


Private duty home care franchise.  Dual-licensed home health/home care companion agency.  $1M+ in revenue. Attractive market with excellent growth potential.

 Home Care /  Florida

$1.5 million home health company.  Medicare/Medicaid-certified.  Primarily skilled services.  80+% HMO.  15+% Medicare.

 Home Health /  Massachusetts

4-star home health agency.  $2.5 million revenue.  Experienced management team.  Strong financials with outstanding local reputation.  Huge growth opportunities.

 Home Health /  Michigan

$1.5 million revenue chiropractic/physical therapy business.  High profit margin/low operating costs.  Diverse referral sources.

 Other /  Maryland

$3.3 million in revenue.  Autism center providing ABA, OT, PT and ST.  In-clinic and in-home services.

 Other /  Michigan

Non-skilled licensed home care organization.  Approx. $2 million in annual revenue.  Strong management team in place.  Southern California.

 Home Care /  California

Joint Commission-accredited psychiatric treatment center.  Residential, PHP, IOP, OP and home health services.  National referral base; reputation for excellence, innovation.  $3M EBITDA on $7M revenue...

 Behavioral Health /  Midwest

Central Ohio-based home health company with private pay.  $2.3 million in revenue.  13.5% EBITDA.  Strong growth trends, full staff in place.

 Home Health /  Ohio

Non-medical home care franchisor.  Platform opportunity with national footprint.  Systemwide revenues more than $12 million.  Franchise locations in 16 states.

 Home Care /  Texas

$2+ million private pay.  Profitable with great reputation.

 Home Health /  Pennsylvania

Profitable hospice agency with $600,000 in revenue.  Ready to grow with full complement of staff in place.

 Hospice /  Pennsylvania

CHAP-accredited private duty business.  $2.8 million projected 2021 revenue.  Workers' compensation primary source of revenue.  Regions 9, 10 and 11.

 Home Health /  Florida

$1 million Medicare home health agency in northwest Minnesota.  Well-established.  Diverse referral sources.  Long history of excellent care.

 Home Health /  Minnesota

$4.9 million Medicare home health agency located in Phoenix, Arizona.  Showing strong year over year revenue growth since 2018.  Diverse referral sources, well run with...

 Home Health /  Arizona

Hospice with $3.5 million in annual revenue. Accredited. No cap or regulatory issues.

 Hospice /  Texas

$2.5 million New Mexico home health agency. 87% Medicare. Long history in the community and existing staff in place.

 Home Health /  New Mexico

Home Health Index July 2022 | Stoneridge Partners

From Brian Bruenderman, Publisher of “Home Health Index.” Brian can be reached at [email protected] or (239) 561-0826, and toll-free at 800-218-3944. Previous editions of this monthly newsletter can be searched for at the bottom of the home page of the Home Health Index. Links to Google Finance: Amedisys | LHC Group